The news that Northern Rock is being sold to Virgin Money has raised questions about the timing of the sale and the amount of value that will be recovered by taxpayers.
Some have suggested that the agreement to sell Northern Rock now indicates a lack of confidence in the state of the banking system over the next couple of years.
Certainly one well-known business person is likely to have received a very good deal from the sale.
Savers who have money with both Northern Rock and Virgin money might be worried about the impact of the deal on the protection provided by the Financial Services Compensation Scheme (FSCS).
It has been confirmed by the FSCS that both organisations will maintain a separate banking licence once the sale goes through on 1st January 2012.
This means that savers with money in both banks will retain full coverage up to the existing compensation limits.
Savers are entitled to protection of £85,000 for deposits with UK authorised and regulated banks, or £170,000 for joint accounts. These compensation limits apply to each banking licence.
Whilst the likelihood of the UK government allowing a bank to go bust remains relatively low, savers with money in a bank over the amount of the compensation limits should consider spreading their savings around to benefit from full protection.
Photo credit: Flickr/D@LY3D
